Fibonacci retracement levels

By John Fibonacci

You may have heard about Fibonacci, the man who discovered a set of numbers who that have a major affect on the market. So who is this Fibonacci fellow, and why are his findings so important in the market place?

The mathematical findings by this thirteenth century Italian man has yielded a useful technical analysis tool which is used in technical analysis and by scientists in a large array of fields. Born Leonardo of Piza, he is better known in the trading community as Fibonacci. Fibonacci's best known work is Liber Abaci which is generally credited as having introduced the Arabic number system which we use today.

Fibonacci introduced a number sequence in Liber Abaci which is said to be a reflection of human nature. The series is as follows: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144 and on to infinity. The series is derived by adding each number to the previous. For example, 1+1=2 , 2+1=3, 3+2=5, 5+3=8, 8+5=13, and so on.

Now, Fibonacci is a powerful technical tool that can make you win in your trading.

Traders (Pros) use the Fibonacci series mainly for retracements and to show where support and resistance might come into the market. It also use to enter or add onto a position. In a new video, it will show you these exact retracements and how they affected the market at that time. - 23210

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Find out more about Fibonacci retracement and Forex managed accounts. A complete guide free of charge.

Long Term Investing with Options

By Jordan Weir

Many traders view stock options as only a short term trading strategy. This is because the idea of a highly leveraged bet with the potential to make big bucks quickly appeals to the risk taker inside all of us. Just like a card counting black-jack player, options can be used to make significant short term gains, provided the player is careful, and knows what they're doing. But while stock options are usually employed solely by that clique of high-octane traders, they actually have enormous benefits that tend to go unnoticed by many a long term investor.

The stock option strategy I'm about to unveil isnt often used. In fact, I've only briefly heard mention of them on obscure websites, and even then, not in enough detail to give an example. So here it is, what I believe may be the best kept secret from long term investors on main street. The stock option strategy for the long term investor.

Its the vertical option spread, using leap options. How this strategy works is you buy one option, while simultaneously selling another option for the same month, but at a different strike price. While XYZ is generally my generic ticker, I will use a real company in this case. Keep in mind, this is NOT a recommendation. Indeed, it would probably be a terrible idea to invest in the example I'm about to give. Its just an example. Yet to get realistic prices for this strategy, it may be helpful to use a legitimate company.

note:I wrote this part of the article about a short time ago, prices may not be 100% current. So GE is currently at 10.41 per share. In this example, let us talk the January 2011 options, giving GE a large amount of time to go the way we believe it will. So if you thought GE was an excellent long term buy, it would be within reason to believe it's going to at least $20 per share by that point. By January 2011, many people believe the recession to be over, and that single development alone should lead to a substantially higher stock price.

Buy one option to start the vertical spread, and sell a second option at a higher price to complete it. With our price target of around $20, and given the current price, 10.41, I would buy the 12.50 strike call option, and sell the 17.50 strike call option. The 12.50 option can be bought for 2.71 at the moment, while the 17.50 can be sold for 1.40, giving us an total cost basis of 1.31 per share for the vertical spread.

Now lets examine this trade for a second. If General Electric is trading below 12.50 on the January 2011 expiration, both options expire worthless, and the 1.31 per option spread invested is gone. On the other hand, if GE is trading above 17.50, then the 12.50 option will be worth exactly $5.00 more then the 17.50 option, and so the position has a value of $5.00 per share. If its between 12.50 and 17.50, the call we sold expires worthless, while the call we bought will have value equal to the difference between the stock price and the strike price; 12.50 in this case. How do you calculate the break even? Well we paid 1.31 for the option spread, so if its exactly 1.31 higher then 12.50 (13.81), then well be at break even if the stock is at that point.

That gives us an amazing return of 281% if GE is above 17.50, for an annualized return of 107% (holding period is 22 months). Because of the high potential for risk - a complete loss of investment if GE is below 12.50 in Jan 2011, you shouldn't put more then you're willing to risk in the trade. Definitely a high risk, high reward play. Yet given how much time there is, it is a much safer bet then short term options, and much more profitable then just buying the shares.

So now that the basic idea is covered, what are some examples of vertical spreads I would consider? I am a strong believer in investing in emerging markets, so I am long term bullish on EEM (IShares MSCI Emerging Markets Investment Index). The January 2011 25-30 vertical on EEM is only going for about $1.88 at the moment, with EEM trading at 25.30 so I think that would be a superb investment. Above 30 it would be worth $5 at expiration, while below 25 it would be worthless. Unless the economy further deteriorates, I can not imagine that occurring.

Similarly, I expect FXI (iShares FTSE/Xinhua China 25 Index) to go up. The "China miracle" isn't over, merely in a subdued state due to temporarily reduced demand. The 30-35 vertical Jan 11 vertical would be worth $5 at expiration if FXI is above 35, which from its current price of 28.51, is not much of a stretch. That vertical spread currently has a $2 price, so that would be an even 150% return from now until January 2011.

A significantly more controversial play would be Bank of America. While the trader in me screams to short the stock, I foresee it being far more valuable then it currently is a couple years down the road. The simple reason is that yes; the financial sector has been hammered by the current collapse. Yes, some banking companies have went bankrupt, or have been on the verge of bankruptcy. Is the financial system going to completely fail? No. Are rampant bank runs going to drive them out of business? No. Are banks going to be lending and making money again after this recession ends? YES! Is pent up demand in housing going to cause a rush to buy houses at prices not seen in a decade? YES! Are banks going to profit from this? Most DEFINITELY. If BAC is above 10 at the January 2011 expiration, the 7.50-10 vertical for Jan 2011 would be worth 2.50, while only costing about $0.65. That would give a 286% return, or 108% annualized. The risk of course, is that BAC goes bankrupt, or BAC flounders under the $7.50 per share mark past January 2011. In either case, you would lose your investment. Yet with prices as low as they are now, there isn't a high chance of that scenario unfolding.

For most people, the financial markets are not the place to get rich quick. While some short term traders will have tremendous success with these option strategies, long term investors should use these same strategies while focusing on the longer term, to achieve gains vastly exceeding those of the regular stock market, while limiting risk. - 23210

About the Author:

Want to hear more about this fantastic Stock Trading Strategy? Visit my website and find out all you need to know to become a market master. Find out what sectors to invest in and when, and learn the Stock options strategys the big players use to make money in the markets.

Introduction to Wills and Estate Planning

By Cindy R.

Estate planning in Texas is little different than other states but there are specific requirements for each aspect of your estate plan. The overall objective of your estate plan is to have your property distributed according to your wishes. The estate planning process starts with a will and can include many other elements like trusts, living wills and powers of attorney. Your will is the cornerstone of your estate plan so we will start there.

The first and often the most important instrument to put in place is your last will and testament. A will is a legal document that outlines your wishes regarding your assets after you die. Many people make their own wills through software or forms they download off of the internet but this isn't always a wise choice. Requirements for wills are different from state to state and are not always easy to interpret. If you don't create a will that can be validated in probate court then your estate may be disposed of as if you never even wrote a will. The bottom line is that hiring a professional to help craft your last will and testament is a smart choice and it can be done for a reasonable fee.

Your will establishes your wishes with respect to your property, but what if you become incapacitated and can't direct others as to your wishes? This is where powers of attorney come in to play. A power of attorney authorizes someone else to act on your behalf in business and legal affairs. A durable power of attorney allows another party to act on your behalf if you become incapacitated and are not capable of making decisions on your own. A health care power of attorney is a durable power of attorney that is specific to health care situations.

Living Will - A living will is an advanced directive that spells out your wishes to caregivers if you become unable to communicate them due to incapacity. It can be very specific to certain situations such as not wanting to maintain life support if a physician determines that your situation is terminal. A living will is usually created in conjunction with a Health Care Power of Attorney.

Next we are going to cover Trusts. Trusts are another vehicle that allows you to direct certain types of property with the added benefit that you can place restrictions and requirements on the assets. One of the most significant advantages of trusts is that there is no court involved. This allows for immediate dispersal of assets by the trustee (the person administering the trust). Because there is no probate court involvement trusts can also bypass public record of the transactions.

Lastly we are going to cover some of the tools that are available to help manage your tax burden upon your death. Life insurance is one of the primary methods to manage taxes at time of death. There are also a large variety of trusts that are effective as well. Estate planning for tax consequences is one of the more complicated aspects of estate planning and a professional can help you craft an appropriate plan.

Now that you are familiar with some of the estate planning tools it is time to start the process. Whether you go it alone or enlist the help of a professional the first step is to create a list of all of your assets. Once you have your list of assets you will need to make a decision about what you'd like to happen to each asset upon your death. Should it go to family, your alma matter, your favorite charity or someplace else that is near and dear to you?

Estate planning can seem like a daunting undertaking, but knowing that it is very important and taking it one step at a time will help you complete the process. Hiring professionals to help you in the process is also extremely helpful and highly encouraged. - 23210

About the Author:

Cindy writes articles about estate planning topics like Texas Living Wills and how to Write A Will at TexasWills.com.

Be a Savvy Forex Trader. Learn Forex.

By Bart Icles

What should you do if you want to learn forex trading? Where should you start? These are just few of the questions that will be running through your head once you decide to try forex trading.

The first thing that you should do to learn forex is to find out the different factors and elements of forex trading. You should be equipped with the base knowledge of the forex market and its quirks. You should be able to establish on your own how lucrative it can be if done the right way. If you become a successful forex trader, it can be a way of life.

When you learn forex, you will be able to find out how the forex market came into the finance scene. It started in the 1970s after fixed currency exchange rates were eradicated, replaced by the now dynamic nature of currencies. Since then, the forex market exponentially increased, making it the largest financial market in the world. Even the stock exchange is dwarfed by it.

You will also be able to find out that the forex market involves different types of entities trading in it once you learn forex. Among the diverse players in the forex market are organizations (big and small alike), government entities, private companies, international banks, brokers, firms, and the average Joe. Yes, you're right. The forex market is for everybody, and it can be a very nice thing to venture into if you use the right strategy and continue winning. Major forex market players can earn millions daily!

You will know that you can trade online or via telephone when you learn forex. This will allow you to know the advantages and disadvantages of the different means of forex trading. Once you are able to learn the advantages and disadvantages of the different means, you will be able to gauge where you will be more comfortable in. The major forex trading centers are in big cities, like London, New York, Tokyo, and Frankfurt.

When you learn forex, you will be able to understand its different technicalities along with the basic forex trading principles that you would really be needing in order to be a successful forex trader. You will be equipped with the necessary skills that will help you tell the difference of a good and bad forex trading signal.

Small players like you can trade in the forex market. You should be able to learn forex, though, before anything else so that you can acquire the necessary foundation to be forex-savvy. You can earn a nice, tidy income once you get the hang of it. - 23210

About the Author:

Forex education starts with a desire to learn and a drive to become a great trader. A forex trading education takes dedication and a good teacher. But once you learn how to trade and do so successfully your life will change and you have options and financial resources you never had before.

Learn How To Trade Forex

By Hass67

Learning forex trading should not be difficult. With decent understanding of money management rules and a good trading strategy, you should be ready for conquering the forex markets.

You should always try to understand the big picture. You should start each trading session by looking at the daily charts. After looking at the daily charts zoom into 4hr, 1hr, 30min, 15 min etc charts. Forex trading is about interpreting the past price action as well as about interpreting the future price action.

You need to ask: Is the market ranging or trending before each trade. You should ask: Is there any long term patterns that have developed. By taking a general look at the different charts you will develop a general understanding of how the forex markets are behaving in the short as well as the long term.

You should try to understand the general direction of your favorite currency pairs. You can use candlestick analysis and moving averages (simple as well as exponential) to identify long term patterns and reversals.

Bollinger bands applied to 4hr charts can help you to identify the daily trading range. A daily trading range tells you where majority of price action is expected to happen. Any moves outside the daily trading range can be viewed as short term abnormalities and ignored.

Do some scenario planning, once you have a general overview of the market. Make sure you know what news is scheduled to be released and what is the expected market reaction.

Understanding the big picture does not mean knowing the whole picture. You should only focus on your favorite pairs. It takes a longtime and effort to understand a currencys behavior, how it reacts to things like oil prices, interest rates etc. So concentrate only on a few pairs in forex trading.

You should always try to take notes and keep a daily trading journal. Start each entry in the trading journal by analyzing the general direction of the markets for that day. What you think how the markets are going to react to different news that is expected to be released that day? What should be your entry and exit for the trade. How many pips you are expecting to make?

After each trade, analyze what went wrong and how to avoid it in future! In case of a good trade, analyze how many pips you could have made more and how to tweak your trading strategy for better results in the future trades.

Keep these general tips in mind while you learn forex trading. Never ever trade without putting stop losses! Practice on the demo account for at least three months before starting live trading with your real money. - 23210

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading and swing trading stocks and currencies. Learn Forex Nitty Gritty. Read about Trend Forex System. Try Netpicks Forex Signal Service.